Shell – Does “sh” have to be in the “/bin” directory

POSIX does not specify a complete operating system, so any POSIX-compliant OS will have commands that aren't in POSIX (like init, mkfs, passwd, …). But different OSes have different extensions, and GNU tools (found on non-embedded Linux systems) have a lot.

BusyBox is a set of command-line tools that is intended for embedded Linux systems. It contains most of the utilities and options mandated by POSIX (it's not complete, but it comes close). You can make a running Linux system with a bootloader, a Linux kernel, BusyBox, and Dropbear if you want to log in over SSH. Add Gcc if you want to do development on the minimal system.

If you prefer to start from a full but small distribution, look at MINIX 3. This is a small unix system intended for embedded systems and for teaching.

If you want a more easily extensible system, look at OpenBSD. OpenBSD is focused on security and is conservative on features, but the core system does include major components such as Perl and Apache.

Unfortunately, 'portable' is usually a stronger requirement than 'POSIX-compliant' for shell scripts. That is, writing something that runs on any POSIX shell isn't too hard, but getting it to run on any real-world shell is harder.

You can start by installing every shell in your package manager, in particular debian's posh sounds like what you want (Policy-compliant Ordinary SHell). Debian's policy is POSIX with a few exceptions (echo -n specified, local...).

Beyond that though, testing has to cover a few shells (/bin/sh especially) on a range of platforms. I test on Solaris (/bin/sh and xpg4/sh), and BSD. AIX and HP-UX are very compliant and don't cause problems. bash is a little world of its own.

I'd recommend the Autoconf guide to portable shell, which is absolutely brilliant and saves a lot of time. Large chunks of it are obsolete, but that's OK; just skip TruUnix and Ultrix and so on if you don't care!